For many current lay and rostered retirees, the past few years brought some economic uncertainty. Stock market declines in 2008 and 2009 adversely affected annuity payments to more than 11,000 retirees in the ELCA Participating Annuity, and another 300 in its Bridge Account.
But beginning in 2013, and again in 2014, the trend in payments to annuitants improved. Trustees of Portico Benefit Services, Minneapolis (formerly the ELCA Board of Pensions), approved increases after three consecutive years of annuity payment cuts. For 2014 trustees approved a 3 percent increase in annuity payments, in addition to the 1.1 percent increase it granted in 2013.
With the global economic decline of 2008-09, Portico scrambled to deal with a 26 percent funding deficit in the ELCA Participating Annuity and Bridge Account. In April 2009 it closed the ELCA Participating Annuity and Bridge Account to new entrants. The ELCA Participating Annuity opened again in 2011.
Because of the severe funding deficit, Portico announced that beginning in 2010, annuity payments to retirees would be reduced by 9 percent. At the time, annuitants were told to expect possible additional cuts of up to 9 percent in each of the next two years. That didn’t happen because the fund began to recover, as did financial markets.
The reductions that followed were less severe — an additional 6 percent reduction was put in place for 2011 and another 3.8 percent in 2012.
“We were not immune to the great recession,” said Jeffrey Thiemann, Portico’s president and CEO. “I am painfully aware of how that has been very challenging for our annuitants.”
But overall Thiemann is confident Portico made good decisions in managing the annuity fund during those difficult years and made “reasonable adjustments” in payments to retirees based on market conditions. “Our members, our management team, our board and the ELCA overall can have a great deal of confidence that we have served members well so they will receive payments for life,” he said.
Lay and rostered retirees experienced reductions in their monthly annuity payments in different ways. For example, Charles Lutz, Minneapolis, a lay professional with the former American Lutheran Church and ecumenical organizations, said his annual annuity income went down about $10,000 total from 2010 to 2012. But for Lutz and his wife, Hertha, the effects haven’t been severe, thanks to other income sources such as Social Security.
“The only thing that has changed for us is we’ve been able to invest less,” said Lutz, 82, who also edited the Metro Lutheran newspaper in the Twin Cities. “There is a somewhat smaller balance in our checking account at month’s end than there used to be.”
In Georgetown, Texas, Paul J. Blom, 72, said he and his wife Marie have lost just about 20 percent over a three-year period (2010 to 2012). Blom served 16 years as bishop of the Texas-Louisiana Gulf Coast Synod before retiring in 2007.
The result has been at least a delay in their plans for retirement. “We had hoped to do some traveling,” he said. “That has gone by the boards because we don’t have the resources. For our day-to-day living expenses, we’ve handled it well.”
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